News

A new report from the Financial Times indicates that the European Union is proceeding with an investigation into alleged anti-competitive tactics by Apple in regard to sales and distribution of the iPhone in the European market. A nine-page questionnaire was sent to a number of EU mobile network operators last week relating to iPhone distribution terms, sales practices, minimum iPhone purchasing requirements, and marketing budget restrictions. The questionnaire also reportedly asks whether Apple limits the use of the iPhone 5 on high-speed European 4G networks.

Reports of an EU antitrust probe first surfaced in March when a group of carriers complained about the strict contract terms required to sell iPhones. Apple maintains that its contracts “fully comply with local laws.”

The U.S. government has sufficient evidence to prove Apple participated in a conspiracy to raise e-book prices, U.S. District Judge Denise Cote said during a court conference. “I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books, and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that,” Cote said. The U.S. Department of Justice alleged Apple engaged in a price-fixing scheme with book publishers, which Apple denied — the DOJ originally filed the suit in April 2012. A non-jury trial on the case is scheduled to start on June 3. The trial could last as long as three weeks. [via Bloomberg]

The new iOS 7 is reportedly dropping heavy textures and adding black and white elements, with sources calling the new iOS “black, white, and flat all over.” A new report from 9to5Mac offers more details about iOS 7, about a month after a previous report noted the new iOS would have a “very, very flat” interface. Senior Vice President of Industrial Design Jony Ive is — as many expected — leading iOS away from skeuomorphism, reportedly believing “designs filled with physical metaphors do not stand the test of time,” and that differing designs could confuse users.

Ive has apparently made sweeping changes to the interface. These changes may include: A removal of the shiny, transparent time bar on the lock screen, replacing it with a “shine-free, black” interface; the square pin code grid will feature round, black buttons; the lock screen could utilize additional gestures; widgets may be added to Notification Center; Notification Center will be dark with white text instead of featuring the current “dark linen” background; a panel for Wi-Fi, airplane mode, and Bluetooth toggles could be added; app icons have “lost shine” and Apple icons have been made less skeuomorphic; Apple’s Notes, Mail, Calendar, and Maps apps have a uniformed “flat white” look; panorama-like wallpapers are available; navigation and tab bars have lost gradient textures with some bars sporting a “minor blurring effect”; App Store, Newsstand, Game Center, Safari, Camera, and Weather have changed significantly; iPhone may introduce its own standalone FaceTime app, just like iPad and iPod touch.

iOS 7 has reportedly been “re-architected” several times, so interface changes are still possible. Designers and engineers are also “prioritizing an overhaul of the iPhone’s version of iOS” over iPad’s version of the software. As noted earlier, Flickr and Vimeo will likely be integrated. iOS 7 will likely be released in the fall with new Apple hardware.

In case there was any ambiguity on the matter, Apple has confirmed that it will open its annual Worldwide Developers Conference with a keynote speech on Monday, June 10. By all accounts, Apple will be showing a preview of iOS 7 at the event, as well as the next generation OS X operating system for Macs. It’s still unclear if Apple’s “iRadio” streaming music service will debut during the conference, which runs from June 10-14. [via AllThingsD]

A newly-published Apple patent application discusses an interactive AirPlay update—one that lets a single AirPlay-enabled app simultaneously show multiple, different user interfaces on multiple display devices, coordinating separate interactivity with each display. User input through any display can make changes to the central app and/or modify the app’s data. In short, an app running on an iOS device could also be controlled via the second screen it’s displaying on, rather than just the iOS device itself.

This new AirPlay implementation appears to contemplate a more sophisticated Apple TV or iTV product: Apple’s invention would enable two-way communication between the TV and the Apple TV, such that their separate remote controls—simple or sophisticated—could actually interact with both devices. A TV with integrated Apple TV functionality is also referenced in the application. [via Patently Apple]

Previously believed to launch in late 2013, Apple’s iWatch should arrive in late 2014, according to KGI Securities analyst Ming-Chi Kuo. Kuo claims that the iWatch will use a 1.5- or 2-inch display and GF2 touch technology, components similar to ones previously found in the iPod nano and iPad mini, respectively. However, Kuo believes the iWatch won’t be seen until late 2014 because Apple does not have the resources necessary to develop an iWatch-specific version of its iOS platform, and that there would be a scarcity of components needed to meet high demand. He also expects the device to feature biometrics, secure user identification, and iOS integration.

In a note to investors, Kuo wrote, “Investors shouldn’t be misled by the word ‘Watch’. We think iWatch will not be positioned as a time-telling device, nor as a device that displays information from other Apple products.” As noted on our rumor page about the device, we wouldn’t be surprised to see a name closer to “iBand.” [via Apple Insider]

Apple has revamped the look of its online store’s homepage, placing a considerably stronger focus on Apple-developed hardware and high-margin accessories. Fewer and generally more expensive items have been given prominent positions on the Store’s main pages, while text and links have been reduced. Notably, the redesign removes front-page graphic links to educational discounts, as well as refurbished and clearance products, hiding text links in a tiny “More Stores” section at the bottom of the page.

High-margin accessories have been placed “below the fold” on the new pages, with the “Shop iPod” section pushing particularly expensive speakers below Apple’s own products. Currently, a Father’s Day promotion sits in the center of the main page.

Apple is reportedly planning an “increased presence of third-party social networks” in iOS 7, and more specifically, a deeper integration of photo and video sharing services Flickr and Vimeo. According to a 9to5Mac report, users will be able to sign into Flickr or Vimeo using iOS 7’s Settings application. Users could log into and use Flickr and Vimeo as simply as they currently use Facebook or Twitter for iOS. However, the report notes a “very real possibility that any feature in testing could be removed” before iOS 7 is announced.

While a recent report detailed Apple and Yahoo’s discussion of a deeper partnership, it’s unknown if the Yahoo-owned Flickr was part of those talks. The proposed addition of Vimeo to iOS could conceivably further distance Apple from Google’s YouTube app; sources didn’t comment on Vimeo completely replacing YouTube.

In front of the U.S. Senate’s Permanent Subcommittee on Investigations, Apple CEO Tim Cook reiterated the company’s claim that Apple uses no gimmicks to avoid paying U.S. taxes. “We pay all the taxes we owe. Every single dollar,” Cook said. Under the country’s current tax system, Cook argued that it would be expensive to bring money earned from international sales back to the U.S. As in the pre-released testimony, Cook said that Apple recommends “dramatic” tax code reform. Regarding Apple’s use of Irish subsidiaries, Apple Chief Financial Officer Peter Oppenheimer said those subsidiaries employ nearly 4,000 people. He noted that profits of Apple Operations International and Apple Sales International are already taxed by foreign governments, and U.S. taxes are unaffected by those profits.

Earlier in the hearing, U.S. Senators Carl Levin (D-Mich.) and John McCain (R-Ariz.) brought up many of the points they made in their statements, while placing additional emphasis on Apple’s techniques in using subsidiaries such as Apple Operations International and Apple Sales International to avoid taxes. For instance, in the case of Apple Operations International: the U.S. system taxes based on where a company is incorporated, while Ireland — where AOI is incorporated — taxes based on the people managing the company. Since AOI is incorporated in Ireland but managed in the U.S., it appears to avoid any tax burden in either country — though Apple noted that AOI pays taxes on interest. Levin estimated Apple avoided paying $9 Billion in U.S. income taxes in 2012 alone. McCain pointed to a “flawed system,” while Levin said closing unjustified tax loopholes could provide hundreds of billions of dollars, “whether or not we reform the overall tax code.” By contrast, Sen. Rand Paul (R-Ky.) praised Apple and said the company should be apologized to for having to attend the hearing, and the company should be congratulated for creating jobs.

The U.S. Senate’s Permanent Subcommittee on Investigations claims Apple has avoided paying billions of dollars in U.S. income taxes by using offshore entities. “Apple wasn’t satisfied with shifting its profits to a low-tax offshore tax haven,” subcommittee chairman Carl Levin (D-Mich.) said in a statement. “Apple sought the Holy Grail of tax avoidance. It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere.” The subcommittee also released a 40-page memorandum with findings and recommendations.

Apple CEO Tim Cook is scheduled to appear at a hearing on Apple’s tax practices this morning — the company released its testimony yesterday. In the testimony, Apple points out that it is “likely the largest corporate income tax payer in the US.” Subcommittee ranking member John McCain (R-Ariz.) said in a statement that “Apple claims to be the largest U.S. corporate taxpayer, but by sheer size and scale, it is also among America’s largest tax avoiders.” The subcommittee does not appear to believe that Apple acted illegally, however, the company took advantage of legal loopholes to dramatically lower its tax burden.

One of the findings in the subcommittee’s memorandum involves Apple’s tax rate in Ireland, which is said to be less than 2 percent. The subcommittee maintains Apple’s cost sharing agreement with offshore affiliates in Ireland is “primarily a conduit for shifting billions of dollars in income from the United States to a low tax jurisdiction,” as $74 billion in sales income was shifted to Ireland from 2009 to 2012. Ireland said it’s not to blame for Apple’s low payments, claiming its system is transparent, and other jurisdictions’ tax systems are at fault, according to Reuters.

Apple has released a document containing CEO Tim Cook’s testimony ahead of his scheduled appearance tomorrow before US Senate’s Permanent Subcommittee on Investigations. Responding to questions about the company keeping more than $100 billion overseas, Apple used the testimony to state that it does not use tax gimmicks, and “has substantial foreign cash because it sells the majority of its products outside the US.” The company also points out that it is “likely the largest corporate income tax payer in the US” and notes that it has “created or supported approximately 600,000 jobs in the US.”

As anticipated by comments from Cook last year, Apple proposes that the current US corporate tax system must be reformed — “to reflect both the digital age and the globalization of commerce.” The company believes comprehensive reform should “be revenue neutral; eliminate all corporate tax expenditures; lower corporate income tax rates; and implement a reasonable tax on foreign earnings that allows free movement of capital back to the US.” It does not make more specific proposals in the testimony, but suggests that the simplification of the tax system is in line with its long-held belief system that simplicity is superior to complexity.

Apple is testing a 1.5” OLED display for use in its smart watch, according to a report in Taiwan’s Economic Times. Reportedly, the company was looking at a 1.8” display, but decided for some reason that it was too big. For comparison, the sixth-generation iPod nano contained a wearable 1.5” touchscreen. Another report from the same publication notes that Foxconn has received a small-scale order for the smart watch for about 1,000 units, suggesting that Apple will be testing the device within the company. [via Macotakara]

A new report sheds light on the latest issue alleged to be delaying negotiations for Apple’s streaming radio service: Apple and Sony Music have yet to agree on how much Apple should pay for songs which people only listen to partially before skipping. The report notes that Pandora pays full royalties for each skipped song, as per the Digital Millennium Copyright Act, even if the song “only plays for a few seconds.” Another recent report indicated Apple’s streaming music service could miss debuting at the company’s Worldwide Developers Conference next month based on negotiation delays. Neither Sony Music nor BMG Rights Management — two of the largest music publishers — have apparently agreed to terms with Apple as of yet. [via CNET]

Apple’s continuing negotiations with record labels could prevent the company from debuting its streaming music service by its Worldwide Developers Conference next month, according to a new report. Sony still hasn’t agreed to royalty terms with Apple, and BMG Rights Management, the fourth-largest music publisher, is also said to be holding out. But Universal Music Group, among other industry heavyweights, would like to see iRadio launch “as soon as possible.”

The article also notes how Google beat Apple to a steaming music service with the launch of Google Play Music All Access. While Google’s service is more of a standard subscription service similar to existing services, Apple is building a hybrid service — streaming with on-demand features. “Of course [Apple’s] negotiations were going to take longer,” a source said. Apple’s reluctance to pay advances has also reportedly played a role in slowing the pace of negotiations. [via The Verge]

The Fair Labor Association has released a report acknowledging that Foxconn and Apple are making progress on improving work conditions, but the companies are still exceeding working-hour laws. Apple and Foxconn have agreed to comply with Chinese working-hour law by July — under the law, workers may work 40 hours per week and work 36 hours of overtime per month — but the report finds workers at three facilities have worked between 40 and 60 hours every week. The findings were based on observations and interviews at the facilities. Those same three Foxconn facilities have met more than 98 percent of the action items agreed upon by Foxconn and Apple, the FLA reports. The FLA report also notes “Progress has been made with respect to election of worker representatives to unions.” [via The Wall Street Journal]

Apple CEO Tim Cook has spoken out on the company’s tax practices prior to his scheduled testimony at a Senate hearing next Tuesday. Under pressure over Apple keeping more than $100 billion overseas, Cook told Politico that the company has acted legally. “I can tell you unequivocally Apple does not funnel its domestic profits overseas,” said Cook, “We don’t do that. We pay taxes on all the products we sell in the U.S., and we pay every dollar that we owe. And so I’d like to be really clear on that.” Like many companies, Apple allegedly keeps money overseas to avoid paying high U.S. taxes. Cook noted that Apple is one of the largest U.S. taxpayers — the company paid almost $6 billion in taxes in the 2012 fiscal year. Interestingly, it’s expected that Cook will share Apple’s ideas for comprehensive tax reform at Tuesday’s testimony. [via Politico]

Apple has released iTunes 11.0.3, adding a new MiniPlayer, improved Songs view, and support for multi-disc albums. A greater emphasis has been put on allowing users to showcase album artwork in the redesigned MiniPlayer and Songs view, and the MiniPlayer now includes a built-in progress bar.

In addition, users with multiple disc albums can now have them appear as a single album. Apple also notes that the update provides performance improvements for working with large iTunes libraries.

A newly published Apple patent application reveals a system whereby one iOS device could control the flashes on other devices to better light a scene for photos. The method would allow an iPad, iPhone or iPod touch to use the flashes on multiple other iPhones, for instance, by initiating a master-slave connection. A signal can be sent from the primary device to the secondary devices to adjust timing, intensity, duration, or flash angle.

As described in the filing, instructions sent from the primary device could be displayed as text on the secondary device’s screen. The devices could also be paired using Bluetooth to trigger the flash at the right time. [via Apple Insider]

Apple’s App Store today reached 50 billion downloads, as noted by the end of the official countdown. As the site says, “The grand prize winner will be announced soon. Stay tuned.”

The person who downloaded the 50 billionth app will win a $10,000 App Store Gift Card. The next 50 people who downloaded an app after that will win a $500 App Store Gift Card.

Update: Apple announced the winner as Brandon Ashmore from Mentor, Ohio. The 50 billionth app downloaded was Say the Same Thing by Space Inch, LLC. Ashmore gets a $10,000 App Store Gift Card for his download.

In response to a U.S. Justice Department court filing alleging that Apple engaged in a price-fixing scheme with book publishers, Apple claims that it acted legally, and negotiated different agreements with the publishing companies. A filing from Apple says that the publishers decided on their own to eliminate wholesale e-book discounts and take other steps in an attempt to get Amazon to raise its prices. Additionally, Apple’s filing describes tough negotiations with the publishers. “Apple did not conspire to fix eBook pricing,” Apple spokesman Tom Neumayr said in an email.

The DOJ, however, cites statements former Apple CEO Steve Jobs made as evidence of conspiracy — the evidence includes an email sent to the CEO of a publisher’s parent company and a statement made to Jobs’ biographer. Apple remains the only entity in the suit that has not settled since the case started in April 2012 — all publishers involved have settled with the Justice Department. [via Reuters, Bloomberg]